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Markets: By the numbers

Friday’s global markets

Japan’s Nikkei
14,201.57 -126.37 -0.88%

China’s Shanghai
2,149.56 +7.95 +0.37%

Hong Kong’s Hang Seng
23,249.79 +43.42 +0.19%

Australia’s S&P / ASX 200
5,411.10 -14.40 -0.27%

Barrick Gold Corp. shares fell more than 6% to about $19 in early trading Friday after the miner launched a monster US$3-billion equity offering in an effort to repair its debt-laden balance sheet. As the Financial Post‘s Peter Koven reports, the move was announced late Thursday afternoon, just hours after the Toronto-based miner said it is suspending construction of the troubled Pascua-Lama project. It is the third largest bought deal in Canadian history, according to Financial Post data, and follows months of speculation that Barrick would tackle its debt load. The company is carrying US$15.4-billion of debt, much of it tied to the disastrous $7.3-billion takeover of Equinox Minerals Ltd. in 2011. As gold prices declined this year, servicing that debt became more of a burden and pushed Barrick into action. The company plans to use at least US$2.6-billion of the proceeds from the offering to repay debt. The bought deal is priced at US$18.35 a share, a 5.4% discount to Barrick’s closing price on Thursday. By comparison, when the company issued US$4-billion of stock in 2009, it was priced at US$36.95 a share.

Two years after losing out on a bid to buy rival Prime Restaurants, Cara Operations has reached a deal with Fairfax Financial Holdings Ltd. to merge the two foodservice giants, reports the Financial Post‘s Hollie Shaw. It is a timely union given the headwinds in the full-service dining sector, which has been under pressure since the end of the recession from new-concept fast food chains selling gourmet burgers, modern comfort food and tacos. As reported in the Financial Post in September, Fairfax had been talking for several months with executives at Cara about a possible deal to merge the owners of Swiss Chalet and East Side Mario’s. Under the deal announced Thursday, Prime will become a wholly owned subsidiary of Cara, with Fairfax holding an unspecified financial stake in the company. Cara’s founders, the Phelan family, remain controlling shareholders. Cara had struck friendly $59-million deal to take over Prime in 2011 but it was outbid by Fairfax, who paid $71-million for the owner of East Side Mario’s, Casey’s, Prime Pubs and Bier Markt.

There’s reason behind Canada’s reputation as a commodities play. On the face of it, Canada’s economy appears to be looking a bit healthier these days. Growth in August was stronger than most analysts — and the Bank of Canada — had penciled in their outlooks, reports the Financial Post‘s Gordon Isfeld. But the 0.3% pace reported by Statistics Canada on Thursday was still modest and fuelled heavily by the energy sector and less impressive than the 0.6% gain the previous month. The July increase was likely a whiplash response to the 0.5% drop during June’s Alberta floods and construction strikes in Quebec. Even so, most economists had forecast a small gain of between 0.1% and 0.2% for August. “The big boost to growth came from the oil and gas sector, with output there jumping sharply, likely supported by rising production at new projects,” said economist Emanuella Enenajor, at CIBC World Markets. “But other sectors including real estate, retailing and even the public sector added to growth, suggesting the economy as a whole had a healthy reading in the late summer.”

Bombardier Inc.’s shares went into a nosedive Thursday after the company delivered a disappointing third quarter result and announced some previously unknown execution issues in its train division, reports the Financial Post‘s Scott Deveau. The Montreal plane and train maker also failed to update the market on when it expected its new CSeries aircraft to enter into service, saying only that it is still consulting with suppliers and customers after the first flight of the aircraft was delayed by more than eight months. Pierre Beaudoin, Bombardier chief executive, said he didn’t want to speculate on whether there would a delay in the delivery of the first CSeries. The company has said until now it expects to deliver the first CSeries 12 months after the plane’s first flight, which occurred on September 16. Management did, however, say the flight testing was going according to schedule — with the fourth flight occurring Wednesday — and that the second flight test vehicle will begin flying “within weeks.” Most analysts are, however, forecasting that the CSeries’ entry into service will slip into early 2015 now.

Fairfax Financial Holdings Ltd. booked a big loss for the third-quarter after it suffered claims losses and big deficits in its stock hedges. The insurance and investment company, which has made a conditional takeover offer for smartphone maker BlackBerry, said Thursday its losses ballooned to US$569.1 million, compared with a profit of US$35.7 million a year earlier. Companies buy hedges — contracts that protect the future value of investments and other assets — during volatile stock markets. However, unexpected share price swings can lead to paper losses on the balance sheet, which must be accounted for. On a per share basis, the company, which keeps its books in U.S. dollars, said the loss amounted to US$29.02 per share versus or 85 cents per share in the comparable period. Revenue fell to US$1.12 billion from US$1.89 billion. The loss came as the company saw its underwriting profits grow to US$104.7 million due to an improved performance from its insurance operations compared with US$72 million a year ago.

Warren Buffett, who aims to have US$20-billion in cash at his Berkshire Hathaway Inc., isn’t investing fast enough to keep money from piling up. Berkshire will post a US$4.3-billion third-quarter profit, according to an estimate from Barclays Plc, adding to a cash hoard of US$35.7-billion at the end of June. Buffett also got back US$4.4-billion this month that was lent to help Mars Inc. buy Wm. Wrigley Jr. Co. in 2008. Even in a year in which the company has struck some of its largest deals and accelerated capital spending, Buffett still needs to find acquisitions. Omaha, Nebraska-based Berkshire has already invested US$12.3-billion on a takeover of HJ Heinz Co., committed US$5.6-billion to buy a Nevada electric utility and made smaller purchases through subsidiaries since Dec. 31. “It’s a high-class problem,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “The year’s not up. I wouldn’t be surprised to see another deal of some sort.” Buffett has said he likes to keep US$20-billion on hand should the reinsurance operations need to pay large claims.

How about a little fracking fluid with that cheeseburger and fries? While not quite as blunt, industry executives were in for an unusual treat during a luncheon presentation at the annual Quebec Oil and Gas Association this week in Montreal. Apart from his power-point slides, Halliburton Canada vice-president John Gorman’s served up samples of frack fluid in champagne bottles, encouraging his audience to take a swig of his company’s CleanStim blend. “It was absolutely the first time I drank fracking fluid — you can be sure of that,” said Michael Binnion, President of QOGA and CEO of Questerre Energy Corp. a couple of days after Monday’s event, noting that 20 to 25 executives drank the brew. “I feel fine. There was quite a build-up, but it was a bit of a let-down as it was less viscous than I thought it would be, but more viscous than water. And very stale-tasting.” Mr. Gorman, who drank the frack juice as well, said he was trying to make a point. “We were trying to show that whenever the oil and gas industry is shown a challenge, we view it as an opportunity to find solutions.”

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